DiNapoli: Going Off The Fiscal Cliff Will Cost $43B In Taxes

Failure in Washington to resolve the fiscal cliff negotiations would mean steep tax hikes and a sharp loss of federal aid, Comptroller Tom DiNapoli warned in a report released today.

DiNapoli’s report found that New Yorkers would be hit with a $43 billion tax hike and a loss of $609 million in federal aid.

Lawmakers and President Obama have until the end of the month to resolve the debt negotiations or risk deep spending cuts and tax hikes at the start of the new year.

The fear from economists is that should the country go off the cliff the country’s overall economic picture will suffer.

“There is real danger ahead for New York’s economy if America goes over the fiscal cliff,” DiNapoli said in a statement. “Many New Yorkers are still recovering from the Great Recession and struggling each day to make ends meet – and some are literally digging out from Sandy’s devastation. The fiscal cliff’s massive one-two economic punch could easily push the state’s economy backward.

The report warns that changes in the federal alternative minimum tax would likely result in unplanned additional tax payments, with New Yorker’s on average paying $5,180 more than would pay under the current year’s tax provisions.

DiNapoli is also concerned that families — especially those with low incomes — would be impacted by going off the fiscal cliff.

The average family with two children could possibly see a reduction in the child tax credit, a cost to them of $1,000. A four-person family making $34,000 with two children could also lose $1,000 in tax credits due to changes in the Earned Income Tax Credit, DiNapoli said.

“Voters sent a clear signal in November that a deal must be done and that there must be a balanced approach to increased revenues and spending cuts,” he said. “New York’s congressional delegation and President Obama are working hard to achieve this goal and they have my continued support as they fight for New Yorkers. Now is the time for Washington to show leadership for the good of the country with a reasoned compromise that puts us on the right path.”